What should a sensible economy look like?
In such a system, it seems to me, people would produce as much of their own goods and food as reasonably possible, exchanging their labor for money to buy the other things they need. They would buy only what they need to live a simple, comfortable, happy life, neither denying themselves the things necessary to make life pleasant, nor hoarding or spending frivolously. They would buy from their neighbors wherever possible, in order to both assure the quality of the goods and to support their community. Any surplus (whether of money or goods) would be set aside, saved for a rainy day or for those things that a single year’s surplus won’t buy. When a neighbor was in need, they would lend a hand, comfortable in the knowledge that if they themselves should ever need help their neighbors would cheerfully provide it. Among the virtuous at least, none would be poor or extravagantly wealthy.
Well that may seem like a sensible way to live, but in the world we inhabit it’s crazy talk. If people started behaving that way the entire house of cards that is our economic system would collapse.
What we call the “economy” is a perversion of the word itself, a mockery of it. The system doesn’t depend upon thrift, frugality, prudence or a careful management of limited resources. Rather it is predicated upon the fantasy that resources and wealth are unlimited. Participants in this false economy are “consumers.” As such, they are expected to consume, without regard to need. Quantity trumps quality, of course. In fact, high quality items, tending as they do to durability, are detrimental to the health of this economy. Better are low-quality items that must be replaced frequently. Spending is preferential to savings, and debt is best of all. There is never enough and no such thing as too much. The system depends upon an unending supply of consumers, whose desires are never satisfied. In such a system, widespread contentment would be an economic disaster of the highest magnitude.
But what happens once the basic needs of the citizens have been met and they can’t be induced to buy more than they need? What happens when the beast is hungry and the “consumers” won’t feed it?
In much of the world today consumer demand is decreasing. People are choosing saving over spending–both the aging population entering retirement and, refreshingly, the so-called millennial generation. But of course this is not acceptable to the wizards in control of the world’s central economies and they’re rather desperately trying to figure out how to keep the consumers consuming.
What’s happening now in Japan may portend the future for the rest of the developed world. As Japanese consumer spending slowed down, their Central Bank began implementing measures designed to discourage savings, incent spending and create price inflation. Having lowered interest rates all the way to zero without achieving their mission, in January Japan adopted negative interest rates. Now, instead of earning interest on money deposited into banks, savers are effectively paying for the privilege. But unfortunately for the Japanese economic gurus the move hasn’t created inflation. It has, however, boosted consumer spending on one item–home safes.
Maybe the Lords of Finance will find a way to force people into the cycle of spending and debt upon which our false economy depends. Or maybe the day is approaching when true economy will replace that thing we now call the Economy.